WESTERN UNION CO : Diaspora Small Business Solutions Seen as Key to Development in Africa

11/11/2010 | 08:05am US/Eastern

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At a time of renewed focus on the power of entrepreneurship to lift
people out of poverty, a study by a George Washington University
researcher finds that strong feelings of accomplishment, pride, duty and
honor motivate many diaspora entrepreneurs to invest in their country of
origin. The survey of participants in the African Diaspora Marketplace
(ADM) found that diaspora investment motivations are complex, reflecting
financial as well as personal drivers, including the sense that they can
prevail over common barriers to business success.

Ronald Mutebi, President of TEK Consults Group, is setting up a solar oven manufacturing plant in Uganda. Mutebi's business plan won a grant at the African Diaspora Marketplace, financed jointly by USAID and Western Union. (Photo: Business Wire)

The ADM is an entrepreneurial
business program, supported jointly by USAID
and Western
Union, which seeks to boost economic opportunity in Sub-Saharan
Africa through sustainable start-up and established enterprises by
U.S.-based African diaspora. Earlier this year, more than 700
participants from 19 countries submitted business proposals for grants
to match their own funds to support the execution of their business
plans. Fourteen businesses in seven Sub-Saharan African countries were
awarded matching grants of up to $100,000.

?Africa can see progress similar to what China has seen in less than a
decade, and without substantial foreign direct investment. Just look at
the flow of remittances to these countries. As businesspeople, we in the
diaspora community want to contribute to economic development in our
countries of origin. And we have the passion to succeed in creating
opportunity,? said ADM grantee Ronald Mutebi. Mutebi is President of TEK
Consults Group, which has been testing and distributing solar ovens in
Africa. He is in the final stages of setting up a manufacturing plant in
Uganda and has more than 1,000 prospective buyers for his product.

Mutebi added, ?The ADM to me was a first of its kind, a forum where the
diaspora came to showcase our various enterprises and to learn and share
as well as encourage one another that we are not alone in the struggle
for economic empowerment of our brothers and sisters.?

The survey found that diaspora investment motivation is driven by a
variety of factors, including expectations of financial, emotional,
social-status and political gains as well as family concerns. While more
than half of ADM participants maintained that they invest in their
country of origin to create jobs and income for themselves (62%) and
acquire personal financial independence (65%), approximately three
fourths claimed that their country-of-origin investments would generate
a feeling of accomplishment (83%), will help them feel better about
themselves (79%), enhance their self pride (76%), and fulfill a sense of
personal duty (72%).

?ADM participants invest from the heart out of care and concern for
their families and country of origin. They want to make a difference,"
said Dr. Liesl Riddle, Research Fellow at The George Washington
University Center for International Business Education and Research
(GW-CIBER), and the study's leader. ?This is a great development
opportunity for Africa: to match innovative entrepreneurial ideas and
talent with much-needed funding to bring their visions to life.?

?This research will help us begin to understand the key factors that
enable diaspora investors to be successful. It is part of our process to
identify best practices that can foster economic opportunity and help
small businesses thrive in developing markets,? said Aida Diarra,
Western Union Regional Vice President, Economic Community of West
African States.

Unique ADM business plans are beginning to take shape in several
countries. Among them: Mutebi's TEK Consults Group, which is developing
and implementing a comprehensive solar oven program in Uganda. TEK's
program greatly decreases dependence on wood and agricultural waste
products for cooking fuel, allowing time and money previously spent for
cooking fuel to be spent more productively. Already, the first oven
components have been shipped to be assembled in Uganda. The ovens are
scheduled to appear in Ugandan markets in January 2011.

Earthwise Ferries is reestablishing, managing and operating a fast-ferry
transportation system on Lake Victoria, with destinations in Uganda,
Kenya and Tanzania. The first 150-passenger ferry, designed to run on
diesel or straight vegetable oil, is launching in December 2010 and is
projected to reduce travel time on Lake Victoria by at least 60%.
Earthwise has enlisted 600 indigenous farmers to grow sunflower seeds to
produce the vegetable oil.

Uza-Mazao uses SMS messaging to bring unprecedented levels of efficiency
to buyers and sellers of crops, farm produce, livestock or livestock
products in Kenya. Transactions are conducted using an existing
mobile-phone wallet system. Farmers are able to figure out what is in
demand in their region so they can produce and distribute accordingly.
In the first month more than 2,000 farmer co-operatives have registered
for the service.

Individual entrepreneurs responding to the online survey of ADM
participants perceive barriers that are similar to those documented
through other major research on doing business in the region.
Characteristics described in the environment include bureaucratic,
financial capital and infrastructure barriers.

While direct investment was the primary investment interest of the
diaspora entrepreneurs, the survey's respondents also expressed interest
in investing in mutual funds consisting of firms based in their country
of origin, purchasing government bonds issued by their country of origin
and contributing to funds that would lend to small and medium
enterprises in their country of origin.

The African Diaspora Marketplace was financed jointly by USAID
and Western
Union, with contributions from Western Union Agents Ecobank
Transnational Incorporated (ETI) in Africa and Irv Barr Management in
the United States.

The Western Union Company (NYSE: WU) is a leader in global payment
services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western
Union Business Solutions branded payment services, Western Union
provides consumers and businesses with fast, reliable and convenient
ways to send and receive money around the world, to send payments and to
purchase money orders. The Western Union, Vigo and Orlandi Valuta
branded services are offered through a combined network of approximately
435,000 Agent locations in 200 countries and territories. In 2009, The
Western Union Company completed 196 million consumer-to-consumer
transactions worldwide, moving $71 billion of principal between
consumers, and 415 million business payments. For more information,
visit www.westernunion.com.

About The Western Union Foundation

Through Western Union's Our World, Our Family(R)
signature program, the Western Union Foundation supports initiatives to
empower individuals, families and communities through access to better
education and economic opportunity. Recognized by the Committee
Encouraging Corporate Philanthropy in 2009, the program is a five year,
$50 million commitment announced in 2007 reflecting the efforts made by
Western Union employees, Agents, and partners around the world. Since
its inception in 2001, the Western Union Foundation has awarded more
than $67 million in grants and disaster relief to more than 1,900
nongovernmental organizations (NGOs) in 100 countries. For more
information, visit http://foundation.westernunion.com.

About GW-CIBER

The Center for International Business Education and Research at The
George Washington University (GW-CIBER) serves as a vital portal for
businesses, policy makers, citizens, students and faculty throughout the
nation to increase their international skills and awareness of the
internationalization of the U.S. economy. GW-CIBER supports research,
teaching, and outreach related to the theme of Institutions and
Development. One of GW-CIBER's key programmatic areas focuses on the
roles that diasporas can play in the development of their countries of
origin through entrepreneurship, investment, and other activities that
strengthen the national business-enabling environment. Since 2006,
GW-CIBER has sponsored the GW Diaspora Capital Investment Project, a
multidisciplinary research initiative that examines the motivations and
activities of diaspora investors and entrepreneurs, and the roles of
NGOs, multilateral organizations, and national governments in promoting
and facilitating diaspora investment and entrepreneurship. Visit http://business.gwu.edu/CIBER/.

About USAID

USAID is the lead government agency providing development and
humanitarian assistance to people around the world. The agency's Global
Development Alliance (GDA) links U.S. foreign assistance with the
resources, expertise and creativity of the private sector as well as
nongovernmental organizations. Since its launch in 2001, the Global
Development Alliance has changed the way U.S. international development
projects are financed and implemented. By cultivating more than 900
public-private alliances with over 1,700 individual partners, it has
allowed USAID to leverage an additional $9.6 billion in resources for
development. For more information about USAID and its programs around
the world, visit www.usaid.gov.
For more information on Global Development Alliances, visit www.usaid.gov/gda/index.html.